JLL Report: Sri Lankan tourism sector on the cusp of accelerated growth phase in 2018/19

Posted On 06 May 2018
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JLL-1

  • Consistent policy framework vital to capitalize on rising international profile
  • Commends Budget 2018 initiatives to boost growth, develop domestic airports and aero sports
  • Recommends continued digitization of services to capture growing millennial market

Global real estate consultancy Jones Lang La Salle (JLL) anticipates a strong surge in tourist arrivals and earnings, which could be further enhanced by steps to ensure a transparent regulatory framework and improvements in soft infrastructure.

Noting that two of Sri Lanka’s largest tourist markets, India and China, will account for 25% of the total global population, including the world’s largest population of millennials, JLL cautioned that the opportunity cost to Sri Lanka could be high, if it fails to follow through on key initiatives and does not sideline marginal policies that limit potential for a positive contribution to the industry’s performance.

“There is no ‘magic wand’, all policies need further refinement, transparency and efficient implementation if all stakeholders are to benefit from improved confidence amongst local or joint venture entrepreneurs and the tourist community, especially in this era of digital social media where news, good or bad, can go ‘global’ in the blink of an eye,” the report stated.

Smart moves to capture the big dragon

In addition to a transparent regulatory framework, to assist the tourism sector, JLL stated that it would be critical to have a strong soft infrastructure in place in order to provide Chinese tourists with a streamlined experience. It refers to services like Fliggy – an online travel platform, which acts as an online mall for brands, and is part of China’s Alibaba digital ecosystem – which recently established its Sri Lanka Pavilion with the aim of attracting a million tourists to the island each year.

According to the statistics, provided by China National Tourism Administration, over 62.00 million outbound trips were made by the Chinese in Q1 of 2017, therefore it quickly becomes apparent how important this market may become to the tourism sector in Sri Lanka. The total consumption by Chinese travelers overseas reached $109.8 billion, at an average spend of around $900 per person in the year 2016.

One of the key reasons for this outbound growth, amongst Chinese tourists, is convenient access to reciprocal visa policies with 65 countries around the globe. In addition, 90% of Chinese citizens do not have passports for foreign travel, outlining the tremendous growth potential from this market.

Alibaba has also launched an “Online visa center” for Sri Lanka, which is a prudent move to attract millennials and other Chinese tourists to apply for visas via their smartphones at their convenience.

“The tourism sector is critical to the future prosperity and global standing of Sri Lanka, and prudent leveraging of geographical advantages, FTA’s, Sri Lanka’s natural heritage, cultural highlights and current standing as a tourism ‘hotspot’ are required to contribute significantly to GDP and wealth distribution, amongst the population, spurring infrastructure improvements to the benefit of all.

“It is beholden on elected government ministers and public bodies to engineer a legislative framework that provides clarity and consistency in developing this key element of the nation’s future, safeguarding existing relationships and promoting Sri Lanka to open new markets,” JLL explained.

JLL also commended moves to refine Sri Lanka’s attractiveness as a destination through such initiatives as the continuing development of domestic airports at Sigiriya, Batticaloa, China Bay and Koggala, which would likely encourage both local and foreign tourism with increased revenues. This in turn would pave the way for further investment in infrastructure.

Similarly, JLL noted that the Government’s “Open Skies for Aero Sports” initiative – spanning activities such as Hang Gliding, Ballooning, Dirigibles, Parachutes and Paragliders together with the removal of NBT and PAL levies on non-powered aero sport equipment holds strong potential as an attraction for young adults, particularly millennials from China, India and other growth geographies. The report further noted that such initiatives would also support growth of direct and indirect job opportunities in associated businesses.

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